Real estate experts agree that the old properties have a lot of potential to give a profitable deal to the investors. Many investors are generally tempted to invest in ready to sell properties or those that are visually appealing. However, old properties that do not require major structural repairs can fetch a handsome price after refurbishment. Minor alterations can significantly boost your property value.
While selecting a particular fixer-upper, you should be able to estimate the rehabbing costs involved in the project in order to enhance its saleability to convert it into a profitable venture. Listed below are some of the major costs that should be taken into account to estimate the rehabbing costs of your fixer uppers:
These include purchase price, any outstanding taxes and origination fees. Most new buyers are surprised with the amount they spend on their fixer-upper in addition to its actual purchase price. It is advisable to ask for a ‘good faith estimate’ while financing your project through a lender.
Good faith estimates provide a clear idea about the costs incurred in purchasing a property. You can also shop around and compare estimates offered by different lenders. Beware of lenders who hide fees from borrowers and reveal it at the last moment before closing the sale.
Repair costs are almost unavoidable when it comes to purchase of old properties and are an important section of rehabbing costs. Repair costs typically include painting costs, flooring, landscaping, and roof repairs and all such costs required to make the house appealing and restore its functional value.
A good contractor would be able to guide you and give you a rough estimate of the impending repair costs.
Inspecting a house is crucial before finalizing it. It gives you an opportunity to look out for any major defects you had failed to see earlier. You can appoint an experienced inspector to do the job. It saves you from other costs that you had least expected. Professional inspection of your fixer-uppers along with structural inspection can cost you about two hundred dollars. Many people incur huge losses, as they fail to conduct title search.
A property with an incomplete set of documents can cost you a great deal. Property documents should include important documents such as a certificate of occupancy to avoid going through the ordeal of obtaining a copy of it. If you are planning to live in the house, you will require a homeowner’s Insurance policy or else a landlord’s policy if you are planning to lease it. Generally, you are required to obtain title insurance while purchasing a property.
In almost all real estate purchases, you will need to obtain title insurance to help protect you against title claims. Your attorney can help you choose the proper coverage.